Marois’s Quebec Separatists to Form Minority Government

Parti Quebecois Leader Pauline Marois returns to complete her speech after being escorted off the stage by security in Montreal. Photographer: Paul Chiasson/The Canadian Press/AP

Sept. 5 (Bloomberg) -- Quebec’s separatists will return to
power for the first time in nine years, in an election marred by
a fatal shooting at the Montreal nightclub where Parti Quebecois
leader Pauline Marois was giving a victory speech.

An armed man entered the building from a back door and
fired shots that left one person dead, Montreal police said.
Television images showed a man wearing what appeared to be a
bathrobe being carried away by police outside the club, yelling:
“Anglos have awakened.”

Marois’ Parti Quebecois, which seeks independence from
Canada for the French-speaking province, won 54 of 125 electoral
districts, seven more than it held before the vote, according to
results posted on the Elections Quebec website. That means the
PQ will need support from opposition parties to pass laws.

The result also means Marois, the first woman premier of
Quebec, probably won’t have a strong enough mandate to start the
province toward another referendum on secession. Marois said
last week it would be “very difficult” for her to advance the
separatist agenda at the desired pace with a minority of seats.

The PQ received “only one-third of the vote and it’s going
to be very tough for Ms. Marois to make any kind of headway on
sovereignty,” Alain Gagnon, a political science professor at
Universite du Quebec in Montreal, said in a telephone interview.
“I don’t think one can imagine a referendum taking place during
the first mandate.”

Liberals Defeated

The pro-Canada Liberal Party won 50 districts, down from 64
before the vote, with the Coalition Avenir Quebec, which also
opposes holding a referendum on secession, winning 19, up from
nine. The pro-independence Quebec Solidaire party won two
districts, up from one. Liberal Leader Jean Charest, who had
been premier since 2003, failed to win re-election in his own
district. His party received 31.2 percent of the vote, behind
the PQ’s 31.9 percent, while the CAQ won 27.1 percent, according
to Elections Quebec results.

Quebec has twice voted in referendums against seceding from
Canada, most recently in 1995. The sovereignty issue has lost
momentum in recent years, with an Aug. 31 CROP Inc. poll showing
support for sovereignty at 29 percent, while 68 percent opposed
it.

“Quebeckers made their choice and we will respect this
choice by governing with all elected members,” Marois told
supporters in Montreal. “I am certain will be able to find the
necessary compromises.”

Shots Fired

A Parti Quebecois government would call a referendum on
independence “at the appropriate time,” according to the
party’s electoral platform. Marois, 63, has refused to commit to
holding a referendum in her first mandate, though she has said
an independent Quebec is her ultimate goal.

Marois was rushed off stage by security during her victory
speech, then returned a few moments later asking for calm and
for the crowd to leave slowly.

A man of about 40 was shot and declared dead on the scene,
Ian Lafreniere, a spokesman for the Montreal police department,
told reporters earlier today. A second man -- who had surgery
after suffering gunshot wounds -- is currently in stable
condition, while a third person, who was treated for shock, has
been discharged, the McGill University Health Center said today
in an e-mailed statement.

The shooting took place around midnight New York time near
the back door entrance to the Metropolis nightclub in downtown
Montreal, Lafreniere said. The 62-year-old suspect was carrying
two weapons and tried to set fire to the nightclub after
shooting, Lafreniere told Radio-Canada radio in an interview
today, adding the man wasn’t known to police.

Police Inquiry

Provincial police are handling the inquiry and cannot rule
out the possibility that Marois was a target, Guy Lapointe, a
spokesman for the Surete du Quebec, told reporters in Montreal.
Investigators have interviewed about 15 witnesses so far,
Lapointe said.

“We’re saddened by what happened last night,” Charest
told RDI television network today in his Sherbrooke
constituency. “It’s a shock. Who would have thought something
like this could happen, especially on election night?”

Canadian Prime Minister Stephen Harper said in an e-mailed
statement it is “a tragic day where an exercise of democracy is
met with an act of violence,” adding “this atrocious act will
not be tolerated and such violence has no place in Canada.”

Marois said she wasn’t made aware of any security threats
during the election campaign and never felt in danger last
night. Quebec “is a non-violent society,” she said in
Montreal. “An act of madness cannot erase this reality.”

New Cabinet

Marois said she will probably form her cabinet within two
weeks. To honor campaign pledges, she said she plans to cancel
planned university tuition increases through a government
decree, scrap a law that restricts the rights of demonstrators,
and introduce new laws governing the use of French in the
workplace.

Quebec bonds outperformed after the election results. The
province’s 3.5 percent bonds due in December 2022 tightened two
basis points, or 0.02 percentage point, relative to Ontario 10-year bonds, according to Scotiabank data. Quebec’s 4.25 percent
bonds maturing in December 2043 also narrowed two basis points
versus similar-maturity Ontario debt.

Provincial Debt

Government debt amounted to about 62 percent of Quebec’s
2011-12 gross domestic product, highest among Canada’s 10
provinces, according to an August report by Toronto-based
credit-rating company DBRS Ltd. Quebec’s debt is rated A+ by
Standard & Poor’s, Aa2 by Moody’s Investors Service and A (high)
by DBRS.

The Canadian dollar, which had little reaction to the vote,
later fell after Bank of Canada Governor Mark Carney kept
interest rates unchanged. The currency declined 0.5 percent at
99.07 cents per U.S. dollar at 2:44 p.m. in New York. One
Canadian dollar purchased $1.0094.

“The broad outcome ended up being the expected one,”
Jimmy Jean, a strategist in the fixed income group at Desjardins
Capital Markets in Montreal, said today in a note to clients.
“There is a broad consensus around the fact that with a
minority government, the PQ will need to water down some of its
most controversial promises in order to maintain power.”

Ministers Defeated

In addition to Charest, other Liberal ministers who lost
their districts include Natural Resources Minister Clement
Gignac, a former National Bank of Canada economist, and Alain
Paquet, the province’s delegate finance minister.

“With Mr. Charest losing his seat, the Liberals will now
become the PQ’s natural allies” in the legislature, Gagnon
said. “They will need to rebuild and go through a leadership
race. They are not going to try to bring the government down.”

Marois last month pledged to balance the provincial budget
by limiting program spending growth to 2.4 percent a year and by
boosting revenue through increased mining royalties and higher
taxes on wealthy individuals. The tax increases, aimed at
residents who earn at least C$130,000, would bring in C$610
million annually, according to the party platform.

Marois wants the government to assert greater control over
Quebec’s economy, and came out against Mooresville, North
Carolina-based Lowe’s Cos.’s unsolicited bid for Rona Inc., the
Quebec home-improvement retailer.

A Parti Quebecois government would wind down the C$4
billion Generations Fund -- currently managed by the Caisse de
depot et Placement du Quebec -- and use the money to pay down
the debt at the end of this year, according to its platform.

Mining Royalties

Marois wants Quebec to boost mining royalties because she
argues the province doesn’t get enough from resource extraction.
The PQ planned a 5 percent minimal royalty on the gross value of
all mining output, in addition to a 30 percent tax on “super
profits” from the extraction of non-renewable resources -- a
royalty regime similar to that of Australia.

Harper last night congratulated Marois on her victory. “We
do not believe that Quebecers wish to revisit the old
constitutional battles of the past,” Harper said in an e-mailed
statement. “We believe that economic issues and jobs are also
the priorities of the people of Quebec.”

Others echoed that sentiment. “The good thing for
federalists is that Ms. Marois doesn’t have any kind of a
majority,” Harold Chorney, a political science professor at
Concordia University, said in a telephone interview from
Montreal. “The sovereignty agenda has to be put on the back
burner.”